Holiday Shopping Budget? 65% Don't Have One

A new survey shows that when it comes to holiday spending, most people are living in Never-Never Land.

In an American Bankers Association telephone survey of 1,000 people last month, 65% of respondents said they had made no budget for holiday spending.

That is about nine percentage points higher than last year.

The ABA began conducting the survey in 1996 to persuade people to budget for holiday spending, since 20% of annual consumer purchases are made in the final months of the year. The survey covers all types of spending: cash, check, credit cards, and debit cards.

"When you don't budget, there is a possibility you will over-extend, and you may find yourself with a New Year's debt hangover," said Keith Leggett, a senior economist with the Washington-based trade group.

Though consumers think they can pay off their holiday debts in two to three months, the ABA found last year that it actually took them an average of six months to pay off the effects of seasonal cheer.

"They overestimate their ability to pay off debts incurred over the holidays," Mr. Leggett said.

Experience has also shown that people spend more than they intend on holiday goods.

Though 59% of this year's respondents said they would spend $500 or less, past studies have shown that people typically spend nearly $100 more than they think during the holidays.

This year's survey did yield some statistics that buck the usual findings.

Among late payers-people who have missed one credit card payment in the last 12 months-44% earn more than $50,000 annually, and 4% earn less than $15,000.

"From our point of view, it's not that too much credit is pushed on lower-income households, or that lower-income households don't have the ability to manage credit," Mr. Leggett said. "Delinquencies are among the affluent people who can afford to make payments."

Mr. Leggett said these high-income people are living beyond their means and doing a poor job of managing debt.

The survey also found that women were more likely to make a budget for holiday spending: 43% of women had done so, versus 28% of men.

The ABA reported that total consumer debt as of August was $1.2 trillion, including $524 billion in credit card debt.

Only 35% of consumers pay card balances in full each month, the ABA said.

Various estimates put consumer holiday spending at $162-$200 billion during the six weeks before Christmas, but surveys have found that people have begun shopping earlier in recent years.

Retailers say the holiday season has gotten off to a slow start this year.

Mr. Leggett said people were not making budgets this year because "consumer confidence is strong and unemployment is low."

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